According to three sources, Blackstone is in talks to sell its 50% ownership in some of the commercial assets it owns with the Salarpuria Sattva group in Hyderabad and the Panchshil Group in Pune to Singapore’s sovereign wealth fund GIC. The projects have a $4 billion enterprise value and 26 million square feet of rentable space. Depending on the talks, the sale might be in the range of $1.5-2 billion, sources stated. One of the insiders stated that the agreement is still in the planning stages and that much will depend on the assessments and the final pricing. About 5 msf of the overall space is being built.
The agreement comprises Panchshil’s Eon Free Zone, Tech Park One, and ICC Tech Park, which also has Pavilion Mall and a 415-key JW Marriott hotel. The partnership was established in 2014. Knowledge City, Knowledge Capital, and Knowledge Park are the projects in Hyderabad that fall under the block that Blackstone has with the Salarpuria company, and the JV has been in place since 2017. Along with the two real estate groups, Blackstone is building and owning additional projects that are not covered by the agreement with GIC. It was also made obvious by sources that it was selling its stake in a few of the projects rather than leaving the joint ventures. Indications also pointed to the possibility of other parties being interested in the projects, even if GIC was the front-runner. GIC did not react to a question submitted through a contact form on their website, while Blackstone declined to comment.
To create Asia’s largest real estate investment trust and list it, Blackstone originally intended to combine all commercial properties under its JVs with its own office portfolio held under Nucleus Office Parks. These intentions have since evolved as the US-based alternative asset management behemoth prioritizes the monetization of certain of its Indian real estate holdings. A source claimed that Blackstone’s plans for the REIT of its office property were still in place, although with a smaller portfolio.
Distributable earnings are a crucial indicator for Blackstone, and selling a real estate asset is the quickest method to monetize it. It must strike a balance between the maturity of its holdings in terms of the profits it may make from a sell-off and its long-term ability to collect rent and monetize the value through a REIT IPO. There has been a difference in office absorption due to the downturn in the US and Europe, two main sources of Grade A office occupants in India. The office absorption in India declined 5% year over year to 25.8 msf in the first half of 2023 and 6% in the June quarter, according to workplace solutions company Vestian. Most of the fall was caused by Bengaluru, Mumbai, and Kolkata.
